Undue Influence A Clarification of the Law

One of the defences against repossession of a house, where a secured debt or mortgage is not repaid, has been where the partner taking out the loan brought "undue influence" to bear on the other partner.

The leading case was a House of Lords decision (Royal Bank of Scotland vs. Etridge) established that for such a defence to succeed, the wife (in this case) had to establish as a fact that her husband had influenced her and that the influence was "undue" (exceptional). Additionally, a presumption of undue influence will no longer be considered to arise in the ordinary course of a standard bank guarantee backed by mortgage. The House of Lords laid down clear guidelines for lenders to follow to demonstrate beyond dispute that the documents they have agreed to and signed have been fully understood by all those who are party to them.

Another undue influence case dealt with the less common circumstance in which a wife was alleged to have exercised undue influence over her dying husband. In this case, the allegation was that a Mrs Glanville had induced Mr Glanville into gifting his house to her, with the effect that, on her death, the house would pass to her family from her first marriage. When Mr Glanville's family contested this, the Judge's view was that the burden of proof for such an allegation lay with the claimants it was not necessary for Mrs Glanville to demonstrate that there had been no undue influence.

Cases like these illustrate the need for care when dealing with any matters relating to lending or dispositions of property. The law of undue influence is certainly clearer now than at any time in the recent past.

 

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